2019: New record year on the Berlin office market with 950,000 m² take-up
In 2019, the total office space take-up on the Berlin market amounted to some 950,000 sqm, thus clearly exceeding not only the previous year’s figure of 835,000 sqm, but also the result from the record year 2017 (905,000 sqm). The take-up was characterised by major deals: around half of the amount was assigned to the over 5,000 sqm segment in 2019.
Start-ups continue to ensure the high demand for office space, but the public sector was also a major tenant in Berlin as well. The Institute for Federal Real Estate (BImA) alone rented over 70,000 sqm of office services in 2019. In addition, a significant portion of the take-up is attributable to new-build projects, as indicated by the high pre-lease rate of more than 60% for 2020.
Delayed new construction counters short supply
Five years ago, no one could have predicted the stark increase in the demand for office space that we are seeing today, and the office space currently available is correspondingly limited. Comparing vacant space in 2019 with office take-up using the vacancy/take-up quotient produces a value of 0.31 (2018: 0.37). Berlin is therefore the location with the lowest office space reserves among the top seven cities, as measured by take-up.
Unlike the increasing demand, construction activities in recent years have proven to be too hesitant and the scale has been too small to meet the demand. Large amounts of office space will not become available until 2021, 2022 and 2023. Until these new spaces are available on the market, the vacancy rate will likely remain below the 2% mark.
Decentralised locations becoming more appealing
The Schönefeld and BER airports and the Adlershof district are continuing their development towards appealing office locations outside of the city centre with S-Bahn connections. Due to the limited space available in the central locations, companies are spreading out – either entirely or by department – to peripheral locations like these.
In 2019, for example, city centre and suburban locations accounted for around two-thirds of the total take-up. In addition, the rent prices in decentralised office locations such as south Berlin were significantly lower than in central locations. While, in 2019, office rent in suburban districts reached a maximum of around 20 euros per sqm, rents in central locations, at the central station and on the Mediaspree riverside development climbed to the level of 30 euros per sqm.
Peak rent continues to climb in the future
Compared to the previous year, peak rent in 2019 increased significantly by around 4.10 euros per sqm. The increase in rent prices will continue in the future – albeit at a slower pace – because the demand for office space in Berlin is not expected to let up in the foreseeable future. Because the limited office space available may not be able to completely cover the need, Engel & Völkers Commercial forecasts a slightly lower take-up figure for the current year of between 850,000 and 900,000 sqm.
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* The forecast was made before the coronavirus pandemic broke out.
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